A Sanctions Attorney Fee Motion Requires a Finding of Frivolous Conduct for Justification

Posted on November 29, 2011 by David J. McMahon

In August of 2011 in Musaelian v. Adams, 197 Cal. App. 4th 1251 (2011), the California Court of Appeal for the First Appellate District decided a case which further established the necessary prerequisites required for a sanctions attorney fee award under Code of Civil Procedure Section 128.7. 

That statute allows the court to award sanctions to a party for the “frivolous” conduct of counsel for an adversary in litigation. The statute also authorizes the award of sanctions where the conduct was designed to harass the opponent or to cause unnecessary delay in the proceedings. The action arose from a business dispute.

The Plaintiff sued the Defendant and his business (the “first lawsuit”). After the Defendant failed to respond to the complaint, the Plaintiff obtained default judgments against both Defendants and then attempted to obtain partial satisfaction of the judgments through a foreclosure sale on a home that the individual Defendant owned jointly with a third party (the “Homeowners”). The Homeowners sought to protect the house by filing a protective petition for Chapter 13 bankruptcy. The Plaintiff pursued the claim in bankruptcy court, but it was dismissed.

The Homeowners/Defendants in the first lawsuit then brought a new action (the “second lawsuit”) based on the Plaintiff’s allegedly improper attempts to force the sale of the home through foreclosure. The trial court sustained demurrers to the complaint and awarded sanctions, finding the complaint in the second lawsuit was improperly filed. Thereafter, significant procedural maneuvering took place in the matters and the issue of the propriety of the fee award eventually ended up before the First Appellate District.

The Appellate Court stated that under CCP § 128.7, if an attorney presents a pleading or other similar paper to the court for an improper purpose, the court may impose sanctions, including attorney fees. However, where the underlying conduct is not for an “improper purpose” or is otherwise “frivolous,” there is an insufficient basis for an award of attorney fees as sanctions. The Court of Appeal concluded that under the record presented on appeal, the attorney fee award was improper.

 

Sanction Award is Improper Even if Defense Counsel Admitted to Violation of the Court Order

Posted on November 28, 2011 by David J. McMahon

In Miller v. City of Los Angeles, 2011 DJDAR 15764 (9th Cir. 2011), a divided panel of the United States Court of Appeals for the Ninth Circuit decided an unusual case involving the imposition of sanctions, including attorneys’ fees, for a lawyer’s alleged violation of an in limine order at trial. The trial judge imposed sanctions in the sum of $63,678.50 as compensation to the opponent for the alleged violation of the in limine order.

A man was killed when he was shot by a police officer. His survivors sued the police officer and the police department for wrongful death.

During pre‑trial proceedings, the district court issued an in limine order precluding the defendants from arguing or mentioning that the decedent was carrying a gun when he was shot by the policeman. Defense counsel, in closing argument, stated that the police officer thought that the decedent refused to surrender because he may have shot another individual. The lawyer for the plaintiffs objected, arguing that the comment violated the Court’s pre‑trial in limine order. As a result, the court instructed the jury to ignore the statement.

The jury was unable to reach a verdict and the district court declared a mistrial. Later, the family of the decedent moved for sanctions. Counsel for the defense apparently conceded violating the order and apologized. However, defense counsel did not concede that his conduct was tantamount to bad faith, the prerequisite for sanctions. He argued that the transgression was “inadvertent, fleeting and harmless.” The district court granted the sanctions motion and imposed a fee award totaling more than $60,000.

The Ninth Circuit reversed the sanctions award. The Ninth Circuit stated that it was required to review the trial court’s determination that sanctions were proper on the basis of substantial evidence. 

The Ninth Circuit concluded that the in limine order did not provide adequate notice that defense counsel was prohibited from arguing how the police officer perceived the situation. Thus, defense counsel was entitled to argue that the officer was acting reasonably in believing that the decedent posed a threat as having just shot another person. 

The Ninth Circuit therefore concluded that because the defense lawyer did not violate the order, there was no basis for a sanctions award. The Ninth Circuit reversed on that basis.

Cost Shifting is Proper Where Defendant's Section 998 Offer Was Reasonable as a Matter of Law

Posted on November 21, 2011 by David J. McMahon

In Adams v. Ford Motor Co., 2011 Cal. App. Unpub. LEXIS 7411 (Cal. App. 2d Dist. Sept. 29, 2011), the California Court of Appeal for the Second Appellate District decided an important case arising under the cost shifting provisions of California Code of Civil Procedure § 998. This is the so called “offer of judgment” statute. The case arose out of a wrongful death claim against Ford Motor Co. (“Ford”).

The decedent allegedly performed regular maintenance on his vehicles. Five of the cars were manufactured by Ford. He contracted mesothelioma and passed away. His wife and their three children sued Ford. The plaintiffs argued that Ford’s products caused the decedent’s exposure to asbestos.

Ford served the plaintiffs with a settlement offer under CCP § 998 in the amount of $2,500 per plaintiff, amounting to $10,000. The offer also included a mutual waiver of costs. The plaintiffs did not respond to the offer, allowed it to expire and the case went to trial. 

The jury found in favor of Ford, and Ford filed a memorandum of costs, claiming $185,741 in costs, including expert witness fees of $167, 570 pursuant to the cost shifting provisions of CCP § 998.

The plaintiffs moved to tax costs. 

Plaintiffs alleged that Ford’s 998 offer was made in bad faith and that Ford had no reasonable expectation that the offer would be accepted. Thus, it was made only to recover expert witness fees in the event that Ford prevailed at trial. The trial court denied plaintiffs’ motion as the lower court concluded that the offer was reasonable.

The Court of Appeal affirmed the lower court’s ruling. The Court noted that if a plaintiff does not accept a defendant’s Section 998 offer and the plaintiff fails to obtain a more favorable judgment, the plaintiff may not recover post‑offer costs. Moreover, the plaintiff must pay the defendant’s costs from the time of the offer as well as for the services of expert witnesses.

However, to be enforceable, the settlement offer must be “realistically reasonable under the circumstances of the particular case.” The Court concluded that the plaintiffs should have known that their chances of prevailing were slim because they had entered into several other settlements with other defendants for amounts much lower than they sought from Ford.

An Employer is Eligible to Recover Costs Under Labor Code Section 1194

Posted on November 21, 2011 by David J. McMahon

In Plancich v. United Parcel Service Inc., 198 Cal. App. 4th 308 (2011), the California Court of Appeal for the Fourth Appellate District decided a unique issue relating to the recovery of costs under the California Labor Code. The case arose out of the plaintiff’s claim that United Parcel Service (“UPS”) failed to pay the plaintiff proper overtime wages and related compensation.

Larry Plancich (“Plancich” or “Plaintiff”) was a supervisor for UPS. He sued UPS, alleging failure to pay proper wages for overtime compensation as well as unfair competition. He alleged that he worked more than 40 hours per week, and UPS had misclassified him as an exempt employee. The judge ruled in favor of UPS on the unfair competition cause of action. Subsequently, a jury found in favor of UPS on the remaining claims.

The trial court awarded costs to UPS. The amount of the cost award was not decided. 

UPS filed a memorandum of costs amounting to $38,387.20. The Plaintiff moved to strike costs, arguing that an employer may not recover costs, even where it arises from an employee’s claim for overtime compensation under Labor Code Section 1194 which is not successful. In response, UPS argued that Code of Civil Procedure Section 1032(b) required that costs be awarded to the prevailing party, whether it be the employee or employer. The trial court struck the costs request.

The Court of Appeal reversed under Section 1032(b). 

The Court noted that a prevailing party is entitled as a matter of right to recover costs in any action, unless the applicable statute provides an express exemption from cost recovery. Section 1194 gives a prevailing employee in an action for overtime compensation an avenue to recover attorneys’ fees and costs. Because the Court concluded that the statute does not contain express language excluding a prevailing employer from recovering costs, a cost award was appropriate.

 

Untimely SLAPP Motion Does Not Support a Fee Award

Posted on November 4, 2011 by David J. McMahon

In Chitsazzadeh v. Kramer & Kaslow, 2011 DJDAR 14689 (2011), the California Court of Appeal for the Second Appellate District decided an interesting case under Code of Civil Procedure Section 425.16, a special motion to strike under the California anti‑SLAPP statute.

The defendant in the case was a law firm, Kramer & Kaslow (“the Kramer firm”), who represented Brake Land Inc. and Abolfalz Sharjari as plaintiffs in a prior action. That case resulted in summary judgment being granted to the defendants, Mohammed Chitsazzadeh and Mansoureh Shajari, in the original action.

In July 2009, the defendants in the original action sued the Kramer firm, alleging malicious prosecution. After submitting a demurrer to the complaint, Kramer also filed a special motion to strike the complaint under Code of Civil Procedure Section 425.16. The firm alleged that the complaint arose from Kramer’s constitutionally protected activity. The Kramer firm also argued that the Plaintiffs could not show a likelihood of prevailing on the merits.

In opposition, the Plaintiffs argued that Kramer failed to file the special motion to strike within 60 days after service, as required by Code of Civil Procedure Section 425.16. The Plaintiffs further asserted that the motion was frivolous. The trial court denied Kramer’s special motion to strike as untimely. The Court also awarded the Plaintiffs attorney fees.

The Court of Appeal reversed in part. The Court of Appeal noted that under Section 425.16, a special motion to strike must be filed within 60 days after service of the complaint on the defendant.  A plaintiff prevailing on the motion is entitled to an award of attorney fees and costs only if the trial court finds that the special motion to strike was “frivolous” or “solely intended” to cause unnecessary delay.

Here, the Court of Appeal concluded that the Kramer firm failed to file the special motion to strike within the 60 days following service of complaint and that it was not timely. However, the court ruled that the fact that a special motion to strike was untimely, alone, did not support a finding that the motion was frivolous or solely intended to cause unnecessary delay.

 

Court Properly Awards Contingency Attorney Fees as Restitution

Posted on November 2, 2011 by David J. McMahon

In People v. Taylor, the California Court of Appeal for the Third Appellate District decided a unique case involving a claim for victim restitution under Penal Code Section 1202.4(f)(3)(H). The case was unique in that the restitution claim also included a contingent attorney fee component. The trial court approved the restitution claim, including the fee component.

On July 29, 2007, the defendant improperly crossed a double yellow line while driving his vehicle. He caused a head‑on collision with another vehicle and immediately fled the scene.  The victim suffered serious personal injuries and property damage. After he was apprehended, the defendant pled nolo contendere to hit and run driving causing injury. The trial court sentenced him to six years in prison.

The court then ordered $44,554.83 in victim restitution, including $8,333.33 in attorney fees under the Penal Code section noted above. In response, the defendant argued that the award of victim restitution for attorney fees was improper because it was for a contingency fee paid by the victim without a prior determination as to whether the fee was “reasonable.”

The Court of Appeal affirmed the decision, noting that under Penal Code Section 1202.4(f)(3)(H), restitution is authorized for “actual and reasonable attorney’s fees” which the victim incurred due to the defendant’s criminal conduct. 

The Court of Appeal noted that the traditional lodestar method is a fee shifting mechanism applied in many civil litigation contexts. The court noted that the policy reasons underlying victim restitution presents different interests. This court determined that when uncontradicted evidence exists that a victim incurred attorney fees due to the defendant’s actions, it did not constitute an abuse of discretion to award restitution for the fee without application of the traditional lodestar approach.

U.S. News & World Report & Best Lawyers Names Barger & Wolen to Their Best Law Firms List

Posted on November 1, 2011 by Barger & Wolen LLP

Barger & Wolen is proud to announce that the firm has received a first-tier ranking in the 2011-2012 U.S. News – Best Lawyers “Best Law Firms” survey for our regional Los Angeles insurance law practice. The firm is also recognized for our national insurance law practice as well.

In addition, partners Kent R. Keller and Royal F. Oakes are listed for their work in Insurance Law.

“Barger & Wolen continues to be honored by our inclusion in US News & World Report and Best Lawyers’ ranking for the second year in a row,” said Steven H. Weinstein, chairman for Barger & Wolen. “Receiving this national recognition for the work our firm is doing validates for us that we truly are providing the quality legal services our clients’ demand, while maintaining the competitive price structure the insurance industry seeks.”

About the Survey

U.S. News & World Report uses data compiled by Best Lawyers to produce their Best Law Firms rankings. Best Lawyers combines hard data with peer reviews, and client assessments to produce their annual reports.

Rankings of 75 national practice areas are included in U.S. News & World Report’s Money issue, available November 15, with the full results available online today here.